EUR/JPY: Strong hint of bullish intentions, further gains ahead – DBS Bank

EUR/JPY is edging lower from recent 133.48 highs, with the decline gaining impetus on the break of 132.45. As Benjamin Wong, Strategist at DBS Bank, the current pullback sits within a technical pattern and should find stability before resuming to the upside. 

EUR/JPY to resume to the upside

“The decline has shifted the cross to an oversold reading, as it approaches the pivotal 55-WMA of 129.26, which has held since June 2020 and provides the backdrop for a tactical long entry point. If 127.50 holds, the broader picture’s bull trend set from the 114.43 lows remains intact.”

“Checking in on seasonality, the closing months of the year typically net positive returns for the cross.”

“In the long-term monthly chart, the cross has surmounted the trendline resistance drawn from 169.96, the July 2008 highs. Hence, we would side with the bull given there is also a bullish inverse head-and-shoulders pattern in play. This is the big picture view.”